Business Forecast: Healthy pipeline points to busy 2016

With numerous projects in the works, Southwest Washington is poised for growth in the coming year

Dec 25, 2015

Mike Bomar, president of the Columbia River Economic Development Council neatly summed up the economic climate of Southwest Washington heading into 2016 when he stated, “We continue to see a strong pipeline of both recruitment and expansion projects. We don’t provide forecasts, but I will say that we are encouraged by the activity that we’re seeing.” What follows are the details behind Bomar’s statement.

Clark County
Marty Snell, director of Clark County Community Development, said he gauges the economic vitality of the county using two metrics: the number of residential subdivisions and final plats being recorded, and how many commercial/industrial projects site plan reviews (preliminary and final) come through the system. For 2015 (through November), those metrics were very positive – 1,146 single-family permits with a $378 million valuation and 395 commercial permits with a construction value of $118 million. (For comparison, 2014 saw 944 single-family permits, and 400 commercial permits with a value of only $70 million.) He also reported that the number of additions/alterations is up from 600 to 725.

“We continue to see new development come through,” said Snell. “I’ve been signing more and more subdivision plats and year-to-date we have 130 more land use applications than we had last year.”

This active environment means that lots that were signed through the end of 2015 will begin construction in early 2016. Bomar said that the opening of the Banfield Pet Hospital headquarters next year will likely create a lot of buzz in Columbia Tech Center and positively impact the surrounding businesses. He also stated that “all three ports continue to position themselves well with their waterfront and business/industrial site investments. Construction activity will pick up as many successful business recruitments and expansions break ground.”

One hotspot of development is Ridgefield. Bomar said that the “completion of the Discovery Clean Water Alliance project into Ridgefield will create a lot of opportunity for investment in 2016 and beyond.” And Brent Grening, CEO for the Port of Ridgefield, said “It’s been a busy year for us. It’s like someone turned the economy on. It’s been incredible. I expect that to continue into next year, and it’s exciting to see the economy taking root here.”

One project Grening mentioned specifically is the ongoing discussion with the Washington State Department of Fish and Wildlife, which has named the Port of Ridgefield as the “successful proposer” for the site of the department’s new headquarters. While that doesn’t guarantee the HQ will be at the port, it does mean that “there’s more conversation coming.”

The big driver of growth in Ridgefield is residential construction. Grening said that when Portland Metro failed to expand Portland’s urban growth boundary, “land in Clark County got more competitive” because developers can get large tracts of land for industrial and residential projects.

“We’re the next place close-in to the north,” said Grening.

In Ridgefield, about 220 homes were built in 2015, which translates to about 600 new people. Grening expects the same rate to continue in 2016, and possibly continuing for several years. This sort of residential growth, he said, brings other projects on its heels, such as retail and job-related development.

Infrastructure remains a concern throughout the county. Snell mentioned continued discussions about lifting the urban holding around 179th St. near the Fairgrounds (east of I-5). He said that several development interests want to move projects forward, but are stymied by lack of transportation improvements.

“It’s about timing in the marketplace,” said Snell. “The longer they wait the higher the risk they miss the market.”

Bomar broadened the scope of the infrastructure issue, saying that “the biggest challenge remains bi-state congestion and mobility around peak periods for SR-14, I-205 and I-5.” He also said that changing carbon limits rules and initiatives could have serious impacts on many of Clark County’s key employers and heavy power users in the area.

“Energy pricing and reliability is one of our greatest advantages for businesses in Clark County and we will work hard to maintain and enhance our position in this area,” said Bomar. “Low energy costs allow us to offset increased labor costs and better working conditions.”

Grening said, “The challenge is to be able to develop infrastructure fast enough and high-quality enough. If we don’t keep up, we can experience pinch points – which are expensive to retrofit. We need to manage our growth well to get something we can live with and be proud of.”

Skamania County
Pat Albaugh took the reins as executive director of Skamania County Economic Development Council in February 2015. In the ensuing months, he has seen a continued economic uptrend, with new businesses locating in the area and more moving there in early 2016. For example, there’s a high-end furniture manufacturer that will take up residence in the county in January.

“The company has a level of craftsmanship that we’re excited about,” said Albaugh.

The city of Stevenson has also made some improvements, such as the repaving of Cascade Ave. along the waterfront and working toward a railroad quite zone designation.

The Port of Skamania will be 100-percent leased in the first part of 2016. All tenants are light manufacturing. The expansion of Silver Star Industries, Backwoods Brewing and LDB Beverages were high points of 2015; Slingshot Sports’ 40 to 60 employees will move into a new 15,000-square-foot building in 2016 on the port’s North Bonneville property.

Tourism fuels much of the county’s economy; the county is looking to expand its economic diversity through attracting a wide variety of companies, and is also considering some brownfield reclamation projects that could transform county problems into productive properties. Currently, half of the workforce in Skamania County commutes outside of the county to work, but that percentage has been steadily decreasing – something that Albaugh said “they are going to work on more.”

The economic successes of 2015, and the continued growth into next year are shadowed by the same budgetary concerns Skamania County has faced over the past decade. There is a small amount of developable land, due to federal ownership and the Gorge scenic area – only 1.8 percent of Skamania County land is fully taxable. This creates a financial hardship for the county, now compounded by the loss of Secure Rural Schools funding. Also a small, spread-out workforce makes it hard to attract large companies to the area.

But Albaugh maintains a positive attitude, and hopes to take advantage of all possibilities. For example, a new federal highway bill signed by President Obama may not have any immediate benefit, but could potentially ease some development concerns in the county. The bill singles out highways that pass through national scenic areas. Albaugh said he hopes that the county can “leverage” the bill, perhaps to maintain or improve the “three bridges that are vital to the county’s economic success.”

Cowlitz County
From its southern border with Clark County, to the Cowlitz River, Cowlitz County communities are showing signs of new life.

“Things are looking up,” said Cowlitz County Commissioner Mike Karnofski. “For the first time in a long time we’re below the 7-percent unemployment rate. There are lots of calls coming into the Cowlitz County Economic Development Council.”

At the Port of Woodland, all facilities are fully leased, and “people are knocking at their door” according to Karnofski. Tenants include new types of businesses – such as a company that manufactures components for the aerospace industry. The port obtained federal and state grants, plus county funds, to study construction of a new set of warehouses.

“Woodland is the fastest growing area of the county,” said Karnofski.

The Port of Kalama is not far behind, with facilities almost fully leased. The $1.8 billion NW Innovations project (conversion of methane to methanol) is “moving along well” and could start construction in late 2016. Karnofski said the governor signed a technology agreement with the Chinese Academy of Sciences, which reduced the greenhouse gases associated with the project by about 40 percent. The project has no impact on infrastructure because the product comes in by existing pipeline and leaves by ship – no strain on the railroad or I-5. Also, the port and city obtained a collaborative $50,000 planning grant to begin exploring mixed commercial and light industrial use of land located east of exit 32 (East Port project).

Downtown Longview is growing busier, said Karnofski, and the port is working on several large projects:

$800 million bio-based refinery. This facility will handle used cooking oil and some crude oil brought in by rail. This project is starting the permitting process.

$400 million propane/butane export project. This project is in preliminary phases.

The 300-acre Barlow Point property. This property features deep-water access on the Columbia and “has potential for significant investment,” Karnofski said. The port has presented the engineering review to the county.

Economic activity is not limited to the ports, however. Kelso has obtained a $50,000 grant to study potential use of heavy industrial land at the mouth of the Cowlitz River, while Castle Rock has “significantly lowered its downtown vacancy rate” and has constructed a new visitor’s center.

Like Clark and Skamania County, the challenges faced by Cowlitz County have much to do with infrastructure. For example, the county garnered $85 million from the state transportation package to relieve congestion at the intersection of highways 422 and 423, and the city of Kelso received $25 million from the package to construct an overpass at Hazel Street, which will ease access to the area south of Kelso between the railroad and the river. The Martin’s Bluff project will increase rail capacity by adding a third rail line from Todd Rd. (southern end of the Port of Kalama) north to the Kelso airport.

Lack of housing is also a concern, said Karnofski. The NW Innovations project alone could bring in as many as 1,200 construction workers, and there simply isn’t enough housing available to support that influx, even if only half are from outside the area. He said that the cities are working with the Cowlitz/Wahkiakum Council of Governments to solve this issue.

Despite these concerns, all three counties seem poised for a banner year in 2016. Bomar attributed much of the positive economic development to teamwork.

“The alignment of interests between the public sector, private sector, educational and nonprofit partners is as solid as I have seen it in over a decade,” said Bomar. “There’s a distinct and attractive culture in Southwest Washington that is really starting to flourish and be noticed by players outside the region. It’s a great time to be in the business of economic development.”

Clark County development to sport new permitting system

According to Marty Snell, Clark County Community Development Director, 2016 will be a landmark year for logistics.

“We will be implementing a new permitting system that should make it better for us to intake applications, and will create a built-in workflow,” said Snell. The new system will replace the current 17-year-old system.

Currently, the department is working with the vendor to map the workflow and business requirements, making changes to make the system more efficient. The system will be installed in phases. By early summer, residential single-family dwellings on subdivision lots will be handled by the system. The second phase, completed in the fall of 2016, will include all building projects (residential or commercial).

“We’ve been working on this for a better part of two years,” said Snell. “We’re hoping the new system will be much better for the applicants and our staff.”

He said that while there are bound to be a few hiccups, as with any new system, he hopes to keep them “minor and short-lived.”

“I’m looking forward to seeing it go live and be successful,” Snell said. There’s a whole lot of power in the workflow engine.”

What will be the fate of fee waivers?

In 2016, the newly expanded Clark County Board of County Councilors will be evaluating the fee waiver program that has been in place since June 2013. They will determine the effectiveness of this program and whether it should be eliminated, altered or continued.

On December 22, the Board voted to support a resolution that amends the waiver to include a 250-day advance notice period if the waiver is significantly changed or removed.

“The resolution provides recognition that people who have a development in mind and are negotiating or assembling property should not be cut off at the knees,” said Marty Snell, Director of Clark County Community Development. “It enhances the predictability of development cost.”

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